Methodology Used in Research on Corporate Operations in Occupied Territories: Crimea and Palestine

The EIRIS Foundation has undertaken a research project to identify corporate operations in Crimea and Palestine. The research has been conducted in five languages – English, Hebrew, Arabic, Russian and Ukrainian.

Our research is independent and aims to provide investors with information to help them with their decision-making process as well as prompt them to consider their obligations under respected international human rights principles.
In compiling this database, our research used the following approach:

Regular news monitoring of local and international media outlets;

Reports and other materials from:

The United Nations;

Civil society organizations in Crimea and Palestine and internationally;

Sector-specific initiatives such as the Voluntary Principles on Security and Human Rights or the Global Network Initiative;

Our findings go through extensive quality and consistency controls through a multi-step revision process. All companies listed in the database were provided with the opportunity to respond to our research in advance of its release and their comments have been reflected in the final entries. We have also expanded the scope of the database to include private equity firms and Ultimate Companies.

Definitions

This project focuses on corporate presence in the occupied territories of Crimea and Palestine. In determining that these two territories are occupied, we consider the decisions of the United Nations (UN) General Assembly and relevant UN agencies. In particular, the definition within Article 42 of the Hague Convention of 1907, stating that a territory is “considered occupied when it is actually placed under the authority of the hostile army. The occupation extends only to the territory where such authority has been established and can be exercised.”

In the case of Crimea, the UN General Assembly voted on March 14, 2014, approving a resolution calling for member states not to recognize changes in the status of the Crimea region. The UN General Assembly approved on November 15, 2016 a draft resolution on the human rights situation in Crimea, the first UN document to recognize Russia as an occupying power in the temporarily occupied Autonomous Republic of Crimea and the city of Sevastopol.

Geographic Scope

In the case of
Crimea, the borders of the disputed peninsula are self-evident because the territory is virtually surrounded by water. Russian President Putin “extended” the territory of the occupation by referring to the reconstitution of “New Russia”, an historical gubernatorial entity that covered Crimea and large parts of Eastern Ukraine under part of the Russian Empire. But so far, according to the UN, “New Russia” remains confined to history books and is not recognized as a legitimate state.

In the case of
Palestine, research focuses on the territory enclosed by the
1967 borders, which are those territories taken by Israel in the 1967
Six-Day War.

In connection with the Palestinian right to self-determination, UN Resolution 58/292 of 2004 affirmed that the independent State of Palestine should be based on the pre-1967 borders. Generally accepted as the starting point for peace talks, these are the borders shown on the CIA’s map.

When presenting research on companies active in the West Bank, we will not specify whether or not they are located in area A, B or C (transitional administrative/security divisions with a 5-year “lifespan” as defined in the 1995 Oslo II Accord). Per the 2004 ICJ ruling, all of the West Bank is considered to be occupied.

Company assessment criteria

For a company to be listed in our database, it must meet one of the two criteria sets listed below:

A company must have public exposure, AND

A company must have local presence1 in either Crimea or Palestine.

OR

A company must be a private equity firm, AND

A private equity firm has invested in a private company which must have a local presence in either Crimea or Palestine.

Additionally, the database has been expanded to identify publicly traded and privately held companies with at least a 20% stake2 in companies falling under either of the two criteria sets outlined above. These companies will be referred to as ‘Ultimate Companies’.

Company-related definitions

Public Company

A company traded on a stock market or that has outstanding corporate bonds.

Private Equity Firm

An investment management company which raises funds to be used in the purchasing or financing of private companies, delisted public companies, or stakes in public companies in order to generate returns for its shareholders. Sovereign wealth funds are not included unless the fund provides opportunities for co-investment. There is no ownership threshold employed between a private equity firm and its investments (i.e. portfolio companies). We explain the relationship between a private equity firm and its investments in the ‘Notes’ section of the record.

Note: A private equity firm will be listed as the ‘Primary Company’ in the database, except for cases where the company receiving private equity investment, herein after called the private equity subsidiary, is associated with five or more private equity firms. In the case that the private equity subsidiary is funded by five or more private equity firms (e.g. Airbnb Inc), the private equity firms will be listed as Ultimate Companies.

A private equity firm’s subsidiary will be listed as the ‘Local Company’ in the database, except in cases where the private equity subsidiary has a local presence (defined below) in Crimea and/or Palestine through a related company on the ground. Where a private equity subsidiary has a local presence through a different entity, the ‘Local Company’ will be the company on the ground in the territory.

Local Presence

No ownership thresholds are employed. The focus is on presence on the ground in either Crimea or Palestine based on credible evidence from local sources and publicly available information that confirm that the company:

Has a local physical presence with operations in the occupied lands, e.g.

Store

Branch

Franchise

Factory

Depot or warehouse

Office

AND/OR

Conducts activity (Designs/Builds/Operates) related to a local project in the occupied lands, e.g.

Financing, including project financing

Designing

Building

Operating

AND/OR

Has a contract requiring regular or frequent on-site personnel visits to the occupied lands, e.g.

Maintaining equipment

Training operators of equipment

Providing other services

AND/OR

Provides a service marketed from outside but delivered inside the boundaries of the occupied lands, e.g.

Transportation to / from occupied lands

Rental cars targeted for use in occupied lands

Tourism, including online booking agents

Cargo transport through / into / out of occupied lands

Note: Local presence does not include finding a company’s goods within the territory. A company must have a physical presence in order to be included in the database. For instance, toothpaste sold in an occupied territory would not implicate the toothpaste manufacturer, unless the company had manufacturing or distribution operations within the territory.

Note: Our research does not cover companies that facilitate the occupation of the territories solely through the sale of products which may be used to perpetuate the occupation.

Footnotes:

1: See explanation of Local Presence in ‘Company-related Definition’ section
2: Stake may be direct or indirect.

Database Filters

Primary Company

The name of the public company or private equity firm closest to the company with business activity in the occupied land. The Primary Company may be part of a larger corporate structure.

Country of Domicile

The country of domicile of the Primary Company.

Local Company

The name of the company operating on the ground in the occupied land. Please see the Notes section in the record for additional information on the relationship between the Local Company and the Primary Company.

City

The location of the Local Company, or the company with operations in the occupied territory. In the case of agricultural, extractive and other rural concerns, the most proximate city/town will be named. Internet and other Cloud-based companies, which offer services but do not have physical offices within the territories, will be included in the database. Internet and Cloud-based companies will be identified by individual cities, where services have been documented.

Status

This field is territory-specific.

Crimea:

There are three possible statuses for each local company – open, closed, and annexed:

Open: Business operations in Crimea are ongoing.

Closed: Business operations in Crimea have ceased following the Russian occupation in March 2014.

Annexed:
It refers to Crimean companies that were annexed by the Russian government following the occupation. These companies had previously been publicly-traded or private owned Ukrainian companies.

Companies that no longer have access to their Crimean assets have been removed from the database.

A company not previously involved in Crimea, which obtained Crimean assets after the Russian occupation, will be added to the database and identified as Annexed. This may be a private or public company.

Companies identified with the Annexed status will be listed as domiciled in the Russian Federation to maintain consistency with their public reporting.

Note: Companies with the Annexed status will be listed as domiciled in the Russian Federation.

Palestine:

There are two possible statuses for each local company – settlement or non-settlement:

Settlement: Used to describe areas in Palestine in which Israelis live and work, violating Article 49 of the Geneva Convention, which forbids an occupying power from moving its own civilian population as permanent residents onto occupied lands.

Non-Settlement: Used to describe areas in Palestine in which Palestinians live and work.

Sector

Pertains to business operations in the occupied territories, specified using “Supersector” designations in the ICB Sector Classification System.

Activity

Pertains to business operations in the occupied territories, specified using “Subsector” designations in the ICB Sector Classification System.

Notes

Refers to the description of business operations in the occupied territories, significant alliances and relevant corporate structures. Notes may include explanations of the relevant Ultimate Companies and ownership of the Primary Company, including relationships between publicly traded and privately held companies, intermediaries and parent companies.

Umbrella Company

This field includes the name(s) of the privately held or public company(-ies) which have at least a 20% direct or indirect stake in the Public Company or Private Equity Firm (see Definitions above).

Due to the 20% ownership threshold, there may be multiple companies listed in this field.

Government-owned entities and private individuals are not included as umbrella companies.

In the case of complex ownership structures, see the Notes field of the Public Company where we explain the relationships between the companies identified.

As previously noted, a private company may receive funding from numerous private equity firms. If five or more private equity firms invest in a private company with direct or indirect Local Presence in Crimea or Palestine, those private equity firms will be listed in the Ultimate Company field.

We welcome receiving your comments and suggestions on how to improve the database, so feel free to contact us anytime at [email protected].

Disclaimer: We have endeavored to ensure the accuracy of the information contained in our database, but please contact us if you have comments or suggestions with regard to the information presented on this site.